Tuesday, December 12, 2006

Always Low Prices
As an impenitent Walmart customer, i was amused to read what Michael Hugos wrote about "Cross docking" - an inventory management system pioneered by Walmart. "Cross Docking was pioneered by Walmart in its drive to increase efficiencies in its supply chain. In this approach the product is not actually warehoused in a facility, but the facility houses a process where trucks from suppliers arrive and unload large quantities of products. These large lots are then broken down into smaller lots which are then reassembled and loaded onto outbound trucks".
Now let me collate this with what Thomas Friedman says in "The World is Flat"
" I had never seen what a supply chain looked like in action until i visited the Walmart Headquarters in Bentonville, Arkansas". My Walmart hosts took me over to the 1.2 million square foot distribution centre, where we climbed up to a viewing perch and watched the show. On one side of the building, scores of white Walmart trucks were dropping off boxes of merchandise from thousands of different suppliers. Boxes large and small were fed up a conveyor belt at each loading dock. These little conveyor belts fed into a bigger belt, like streams feeding into a powerful river. Twenty four hours a day, seven days a week, the suppliers trucks feed the twelve miles of conveyor streams and the coneyor streams feed into a huge Walmart river of boxed products. But that is just half the show. As the Walmart river flows along, an electric eye reads the barcodes on each box on its way to the other side of the building. There the river parts again into a hundred streams. Electric arms from each stream reach out and guide the boxes - ordered by particular Walmart stores - off the main river and down its stream, where another conveyor belt sweeps it into a waiting Walmart truck, which will rush these products to the shelves of the particular Walmart store somewhere in the country. There a customer will lift one of these products off the shelf, and the cashier will scan it in, and the moment that happens a signal will be generated. This signal will go out across the Walmart network to the supplier of that product - whether the supplier's factory is in Coastal china or Coastal Maine. The signal will pop up on the supplier's computer screen and prompt him to make another of that item and ship it via the Walmart supply chain, and the whole cycle will start anew. So no sooner does your arm lift a product off the local Walmart's shelf and onto the checkout counter than another mechanical arm starts making another one somewhere in the world. Call it "Walmart Symphony" in multiple movements with no finale. It just plays over 24/365: delivery, sorting, packing, distribution, buying, manufacturing, reordering, delivery, sorting, packing..."

Truly Amazing. The latter part of this whole activity where the customer triggers a signal to the supplier forms part of another act that Walmart has pioneered - Electronic data interchange with its suppliers.
What ever may be the cons, this is an amazing, well oiled beast of a machine ! Indian retailers have real reasons to worry. The price conscious Indian customer is an ideal Walmart target. Are the days of mom and pop stores really over ? Hmmm...it is sad to think so, as my father used to own a grocery store till a few years back. Well...it is an ever changing world.


At 7:16 PM, Blogger Mahesh Vijayamohanan said...

did you type that whole thing out??? well thanks neway.. its a lot of info out there... :-)

At 4:55 AM, Blogger Sarath said...

Yes. I typed it :-)


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